Air Canada Express (Sky Regional Airlines) Bombardier DHC-8-402 (Q400) N505LX (msn 4174) YYZ (TMK Photography) (new airline), originally uploaded by Airliners Gallery.

Air Canada Express (Sky Regional Airlines) (Toronto-Billy Bishop Toronto City Airport) will launch operations on May 1 with Bombardier DHC-8-402 (Q400) turboprop aircraft between Montreal (Trudeau) and Billy Bishop Toronto City Airport, with up to 15 flights each way every business day.

Air Canada’s close-in Toronto hub routes:

Above Copyright Photo: TMK Photography. Please click on the photo for the full story of Air Canada Express.

Below Copyright Photo: Air Canada. Billy Bishop Toronto City Airport is reached by a short ferry from downtown Toronto.

Air Canada Jazz (Chorus Aviation) Bombardier CRJ100 (CL-600-2B19) C-FSJJ (msn 7058) IAD (Brian McDonough), originally uploaded by Airliners Gallery.

Air Canada (Montreal) announced today (April 27) it has decided to gradually retire the Air Canada Jazz brand. All regional carriers will begin operating under the Air Canada Express brand. Aircraft will be repainted during normal repainting cycles. Jazz Air will continue to use the Jazz name and livery for their independent (non-Air Canada) operations.

Copyright Photo: Brian McDonough. Please click on the photo for the full details.

Air Canada Jazz Slide Show: CLICK HERE

Air Canada Jazz routes operated by Jazz:

Air Canada Express (Jazz Air-Chorus Aviation) Bombardier DHC-8-402 (Q400) C-GGOY (msn 4365) YUL (1st Jazz Q400 is painted), originally uploaded by Airliners Gallery.

Jazz Air (Chorus Aviation) (Air Canada Express) (Air Canada Jazz) (Halifax) will soon take delivery of its first (of 15) new Bombardier DHC-8-402 (Q400). C-GGOY (msn 4365) has now been painted in the new Air Canada Express brand.

Air Canada Jazz Slide Show: CLICK HERE

Jazz’s routes operated for Air Canada:

Air Canada Express (Jazz Aviation LP) Bombardier DHC-8-402 (Q400) C-GGOY (msn 4365) YUL (1st Jazz Q400 is painted), originally uploaded by Airliners Gallery.

Chorus Aviation Inc. (Halifax) today announced its first quarter 2011 earnings with a net income of C$14.7 million and net income per share of C$0.12.

In other news, Jazz Aviation LP (Halifax) on May 26 took delivery of this first of fifteen Bombardier DHC-8-402 (Q400) NextGen aircraft. These new aircraft will be added to Jazz’s fleet over the coming months with the final airplane arriving in July 2012. Jazz also has options for an additional 15 aircraft.

Jazz’s Q400 NextGen aircraft accommodates 74 passengers in a single cabin configuration featuring all-leather seating. This turboprop airliner is the most recent development in the evolution of the original Q400 aircraft. The Q400 NextGen features an enhanced cabin environment with the introduction of LED lighting, new ceiling panels, dished window sidewalls and larger overhead luggage bins. These features, combined with the Active Noise and Vibration Suppression (ANVS) system, provide for an excellent cabin experience.

The first 15 Q400 NextGen turboprops will replace 15 50-seat regional jets. The first flight DHC-8-402 C-GGOY (msn 4365) is scheduled to operate as flight AC 8910 from Toronto to Quebec City, departing at 0700, on Tuesday, June 7, 2011.

Jazz Aviation officially started operating as Air Canada Express on June 1, 2011.

Air Canada Express-Air Georgian Beech (Raytheon) 1900D C-GORA (msn UE-326) YYZ (TMK Photography), originally uploaded by Airliners Gallery.

Air Georgian (Toronto) as planned, has painted its first two Beech (Raytheon) 1900D turboprops in the new Air Canada Express livery.

Jazz Aviation also painted its first CRJ705 in the Air Canada Express color scheme: CLICK HERE

Copyright Photo: TMK Photography.

Route Map:

Air Canada Express-Jazz Aviation Bombardier CRJ705 (CL-600-2D15) C-GOJZ (msn 15053) YYZ (TMK Photography), originally uploaded by Airliners Gallery.

Air Canada Express (Jazz Aviation) (Halifax) will launch triple-daily, nonstop flights between Toronto Pearson and New York City’s John F. Kennedy International Airport for Air Canada beginning on May 3, 2012. AC will also increase to hourly its flights to LaGuardia Airport. AC serves all three major New York City area airports: John F. Kennedy International Airport, LaGuardia Airport and Newark Liberty International Airport. Air Canada, which began flying to New York 71 years ago, will operate up to 38 nonstop return flights a day between Canada and New York City this summer.

Beginning May 1, 2012, Air Canada will add an additional daily return flight between Toronto and LaGuardia, providing customers convenient hourly service each business day. The new Toronto-JFK service will be operated by Air Canada Express using 50-seat CRJ200 regional jets. The JFK flights will have early morning, afternoon and evening arrivals and departures. With the new services, Air Canada will operate a total of up to 38 return flights a day to the New York metropolitan area from Toronto, Montreal, Ottawa, Calgary and Vancouver.

Copyright Photo: TMK Photography. One of the first Jazz aircraft to be rebranded to the new Air Canada Express brand is this CRJ705.

Air Canada (Montreal) flight AC 8902 today inaugurated service between Toronto Pearson and John F. Kennedy International Airport, making the airline the only carrier serving all three major airports in the New York City region from Canada. With the reinstated route, existing service to Newark Liberty International Airport and an additional daily flight between Toronto and LaGuardia Airport that began May 1 to bring that service to hourly, Air Canada will operate up to 38 nonstop return flights a day between Canada and New York City this summer.

The new Toronto-JFK service is operated by Air Canada Express (Jazz Air) using 50-seat CRJ regional jets. The JFK flights, operating out of Terminal 7, will have early morning, mid-day and evening arrivals and departures. With the new services, Air Canada will operate a total of up to 38 return flights a day to the New York metropolitan area from Toronto, Montreal, Ottawa, Calgary and Vancouver.

Copyright Photo: TMK Photography.

Air Canada Express-Jazz Slide Show: CLICK HERE

Chorus Aviation Inc. (Halifax) today announced it has exercised six of 15 options it holds to acquire additional Bombardier DHC-8-402 (Q400) NextGen aircraft to be operated by its subsidiary, Jazz Aviation LP (Halifax) under the Air Canada Express brand.

Jazz will operate 16 Q400s this month under the Air Canada Express brand, which includes one Q400 on short term lease for the peak summer season only.  The Q400 aircraft accommodate 74 passengers, and are configured in a single cabin.  The six optioned Q400s are contracted to be delivered at a rate of two per month in February, March and April, 2013, and will be placed into operation the subsequent month.  A total of nine 50-seat CRJ100 aircraft will be removed from the Jazz fleet between December, 2012 and May, 2013. As a result, the covered fleet under the Capacity Purchase Agreement with Air Canada will be reduced from 125 to 122 aircraft, with the overall seating capacity, operated under the CPA with Air Canada, being held relatively constant.

The new aircraft will be leased via a Chorus leasing company to Jazz.  The purchase is supported by a third party lender under terms similar to the original order of 15 Q400 aircraft. The transaction is anticipated to be accretive to Chorus’ consolidated operating results. As required under the purchase agreement, Chorus has made pre-delivery payments of approximately $13 million USD which have been funded from current cash balances and will not impact Chorus’ current dividend policy.

In support of the continued fleet renewal program at Jazz, Air Canada and Jazz have agreed to amend their CPA to reflect the following:

• Covered Aircraft reduced from 125 to 122 aircraft, resulting in a net reduction of six seats in the entire Jazz CPA fleet effective May, 2013 once all Q400 aircraft have been introduced into service.
• In February 2013 when the number of Covered Aircraft reaches 122 aircraft, the annual minimum guaranteed Block Hours of 339,000 will be reduced to approximately 331,000 Block Hours to reflect the new number of Covered Aircraft.
• The agreement between the parties does not change the mark-up on controllable costs structure and mark-up rates but establishes new metrics resulting from the new annual minimum guaranteed Block Hours as follows:
• • The Compensating Mark-up will now be applied based on the range between the new annual minimum Targeted Block Hours of approximately 367,000 and the revised annual minimum guaranteed Block Hours of approximately 331,000. The difference between the annual minimum guaranteed Block Hours and the annual minimum Targeted Block Hours remains at 36,000 Block Hours. This agreement also resolves one of the issues raised in the 2009 Benchmark Arbitration with reference to how the Compensating Mark-up formula will be applied.
  • Mark-up on variable controllable costs for annual Block Hours over 375,000 will remain at 5.0%.

The exercise of the six options and the amendments to the CPA do not result in any change to Chorus’ current annual Block Hour guidance for the year 2012 of between 385,000 and 400,000 hours.

Copyright Photo: TMK Photography.

Air Canada Express-Jazz: 

Chorus Aviation Inc. (Jazz Aviation) (Air Canada Express) (Halifax) has announced its second quarter 2012 earnings, with net income of (all currencies in Canadian dollars) $22.9 million or $0.18 per share, and adjusted net income¹ of $27.4 million or $0.22 per share.

Q2 2012 Highlights:

• Operating revenue of $426.3 million.
• Free Cash Flow¹ of $38.7 million, or $0.31 per share.
• Operating income of $36.6 million.
• Net income of $22.9 million, or $0.18 per share.
• Adjusted net income¹ of $27.4 million, or $0.22 per share.

The full report:

Financial Performance -Second Quarter 2012 Compared to Second Quarter 2011

Operating revenue increased from $402.0 million to $426.3 million, representing an increase of $24.2 million or 6.0%.  Passenger revenue, excluding pass-through costs, increased by $25.7 million or 10.8% primarily as a result of $9.0 million related to the early termination of the Thomas Cook Flight Services Agreement, rate increases made pursuant to the CPA, an adjustment of $1.8 million related to the new rates which were retroactive to January 1, 2012,  a higher US dollar exchange rate, and a $1.4 million increase in incentives earned under the CPA with Air Canada; offset by a $1.9 million or 1.2% decrease in pass-through costs from $161.1 million to $159.2 million, which included $5.3 million related to fuel. Other revenue increased by $0.3 million.

Operating expenses increased from $378.1 million to $389.7 million, an increase of $11.6 million or 3.1%.  Controllable Costs increased by $13.5 million, or 6.2%; offset by a decrease in pass-through costs of $1.9 million.  Controllable operating expenses were impacted by the changes in the fleet ownership structure for the Q400 aircraft.  CRJ100 aircraft, previously under operating leases, are being replaced by owned Q400 aircraft, whose ownership costs are comprised of depreciation under operating expenses, and interest under non-operating expenses. The Q400 aircraft lease revenue under the CPA is captured under operating revenue and is designed to provide compensation to Chorus for both depreciation and interest expense.  As interest expense is shown below the operating margin, operating income increased by a similar amount on a quarter over quarter basis.

Depreciation and amortization expense increased by $4.0 million, of which $3.0 million is related to the purchase of Q400 aircraft, with the balance due to the increased major maintenance overhauls and increased capital expenditures on aircraft rotable parts and other equipment; offset by certain assets reaching full amortization.

Aircraft maintenance expense increased by $2.3 million as a result of increased Block Hours of $0.4 million, the effect of the increase in the US-dollar exchange rate on certain material purchases of $1.3 million, and increased other maintenance costs of $2.6 million; offset by a decrease in engine maintenance activity due to the return of CRJ aircraft of $2.0 million.

Salaries, wages and benefits increased by $2.8 million as a result of wage and scale increases under new collective agreements, increased Block Hours, and increased pension expense resulting from a revised actuarial valuation; offset by a reduction in the number of full time equivalent employees.

Other expenses increased by $3.4 million primarily due to increased general overhead expenses (crew expenses increased due to increased activity, rates and training expenses) and professional fees.

Non-operating expenses increased $7.8 million.  This change was mainly attributable to a foreign exchange loss of $4.8 million (of which $4.5 million was related to an unrealized foreign exchange loss on long-term debt and finance leases) arising as a result of the change in value of the Canadian dollar relative to the US dollar, and increased interest expense related to the Q400 aircraft financing of $2.1 million.

EBITDA¹ was $50.4 million compared to $33.9 million in 2011, an increase of $16.5 million or 48.9%.  Free Cash Flow was $38.7 million, an increase of $15.4 million or 66.5% from $23.3 million.

Operating income of $36.6 million for the three months ended June 30, 2012, was up $12.6 million or 52.6% over second quarter 2011 from $24.0 million.

Net income for the second quarter of 2012 was $22.9 million or $0.18 per share, an increase of $6.0 million or 35.3% from $16.9 million or $0.14 per share.

CPA rate setting negotiations

On August 7, 2012, Jazz and Air Canada finalized an agreement on the establishment of new rates for controllable costs that are payable by Air Canada under the CPA in respect of the years 2012 to 2014 inclusive.  This rate review and adjustment is required under the terms of the CPA. The new rates are retroactive to January 1, 2012, and the parties have reconciled the amounts previously paid to the amount owing based on the new rates. The reconciliation is conducted so that the parties will be in the same position they would have been had the new rates been in effect as of January 1, 2012.

Update on investment in South American regional carrier Pluna.

On April 30, 2010, Chorus purchased a 33% non-voting interest in Latin American Regional Aviation Holding Corporation (LARAH).  LARAH held an indirect 75% equity interest in Pluna Líneas Aéreas Uruguayas S.A. The remaining 25% equity interest in Pluna was held, indirectly, by the Government of Uruguay.

In the second quarter of 2012, it was announced that Pluna was in financial difficulty, and that the Uruguayan government had taken control of the airline, allowing it to continue operating.  All of the shares in Pluna held indirectly by LARAH, including the portion indirectly owned by Chorus, were placed in trust with the Montevideo Stock Exchange in return for certain conditions and indemnities from the Uruguayan government.  As a result, Chorus recorded a write-down of $16.4 million to the fair value of the investment through other comprehensive loss, as there is no indication that the LARAH shares hold any current value, and there can be no assurances that a successful recapitalization of Pluna will result in Chorus holding an ownership stake in the resulting entity.

Subsequent to June 30, 2012, Pluna announced that it had ceased operations indefinitely.  The situation with Pluna has no effect on Jazz operations or current cash flows.

¹ Non-GAAP Financial Measures

Copyright Photo: TMK Photography. Bombardier DHC-8-402 (Q400) C-GGOI (msn 4381) arrives at the Toronto (Pearson) hub.

Air Canada Express-Jazz: 

Air Canada (Montreal) is adding the Bombardier DHC-8-402 (Q400) on the Toronto (Pearson-New York (JFK) route starting on November 1. In addition, the carrier has announced that it is boosting capacity on regional routes across Western Canada this fall and winter to meet demand.  The airline will also be gradually introducing Bombardier Q400 aircraft operated by Jazz Aviation (Halifax) under the Air Canada Express brand on key markets from Calgary and Edmonton beginning next year.

Starting next February, Air Canada will be scheduling new Q400 aircraft on regional routes across Western Canada to replace smaller Bombardier CRJ200 aircraft.  Air Canada Express flights are scheduled to enable convenient, point-to-point same day business travel, as well as convenient and easy connections to Air Canada’s extensive domestic, US and international network at Calgary, Edmonton and Vancouver.  Increased services this fall and winter compared to last year include:

As mentioned, in February, 2013, Air Canada will begin gradually deploying 74-seat Bombardier Q400 aircraft on routes within Western Canada, replacing 50-seat CRJ200 aircraft.  The Q400s will initially be scheduled on the following routes:

Copyright Photo: TMK Photography. Bombardier DHC-8-402 (Q400) C-GGOY (msn 4365) of Jazz Aviation is pictured at the Toronto (YYZ) hub.

Air Canada Express-Jazz Aviation: 

Chorus Aviation Inc. (Jazz Aviation) (Air Canada Regional) (Halifax) has announced its third quarter 2012 earnings, with net income of $37.2 million , or $0.30 per basic share, and adjusted net income of $27.1 million or $0.22 per basic share. The company issued the following statement:

Operating revenue increased from $411.7 million to $435.6 million , representing an increase of $24.0 million or 5.8%.  Passenger revenue, excluding pass-through costs, increased by $19.0 million or 7.6% primarily as a result of a 1.9% increase in Billable Block Hours, rate increases made pursuant to the Capacity Purchase Agreement (‘CPA’) with Air Canada , a higher US dollar exchange rate, and a $1.1 million increase in incentives earned under the CPA. Pass-through costs increased from $160.8 million to $166.1 million , or $5.3 million or 3.3% which included $1.5 million related to fuel. Other revenue decreased by $0.3 million .

Operating expenses increased from $380.6 million to $399.0 million , an increase of $18.4 million or 4.8%.  Controllable Costs increased by $13.1 million , or 6.0%.  Controllable operating expenses were impacted by the changes in the fleet ownership structure for the Q400 aircraft.  CRJ100 aircraft, previously reported under operating leases, are being replaced by owned Q400 aircraft. Related ownership costs are comprised of depreciation (an operating expense), and interest (a non-operating expense). The Q400 aircraft lease revenue under the CPA is reflected in operating revenue, and is designed to provide compensation to Chorus for both depreciation and interest expense.  As interest expense is shown below the operating margin, operating income increased by a similar amount on a quarter over quarter basis.

Depreciation and amortization expense increased by $3.3 million , of which $3.1 million is related to the purchase of Q400 aircraft, with the balance due to increased capital expenditures on aircraft rotable parts and other equipment; offset by decreased major maintenance overhauls and certain assets having reached full amortization.

Aircraft maintenance expense increased by $4.0 million , with increased costs of $0.8 million arising as a result of increased Block Hours, the effect of the increase in the US-dollar exchange rate on certain material purchases of $0.3 million , increased other maintenance costs of $1.4 million , and an increase in engine maintenance activity of $1.5 million .

Salaries, wages and benefits increased by $7.4 million as a result of wage and scale increases under new collective agreements, increased Block Hours, increased incentive compensation expense, increased pension expense resulting from a revised actuarial valuation and lower capitalized salaries and wages related to major maintenance overhauls; offset by a 3.7% reduction in the number of full time equivalent employees.

Other expenses decreased by $0.7 million primarily due to decreased professional fees and general overhead expenses; offset by increased crew expenses increased due to increased activity and rates.

Non-operating income increased $19.8 million .  This change was mainly attributable to a foreign exchange gain of $10.7 million (of which $10.0 million was related to an unrealized foreign exchange gain on long-term debt and finance leases) arising as a result of the change in value of the Canadian dollar relative to the US dollar; offset by increased interest expense related to the Q400 aircraft financing of $1.8 million .

EBITDA¹ was $51.8 million compared to $43.0 million in 2011, an increase of $8.8 million or 20.7%, producing an EBITDA margin of 11.9%. Free Cash Flow was $37.8 million , an increase of $8.7 million or 30.0% from $29.1 million .

Operating income of $36.7 million for the three months ended September 30, 2012 , was up $5.6 million or 17.9% over third quarter 2011 from $31.1 million .

Net income for the third quarter of 2012 was $37.2 million or $0.30 per basic share, an increase of $23.3 million or 167.1% from $13.9 million or $0.19 per basic share.

As communicated on October 3 and 4, 2012, the arbitration panel (the ‘Panel’) released its award (the ‘Award’) on the 2009 benchmark exercise between Jazz Aviation LP (‘Jazz’) (a wholly owned subsidiary of Chorus) and Air Canada .

In the Award, two of the three member Panel concluded that the component unit cost driver (‘CUCD’) methodology put forward by Air Canada was the appropriate methodology to use in the 2009 Benchmark to compare Jazz’s Unit Costs to the stage length adjusted median controllable unit costs of the Comparable Operators.  However, the Panel also agreed with Jazz that a number of the additional adjustments proposed by Jazz were also required to be made (the “Adjustments”).The Panel also agreed with Jazz that fleet age impacts the rate at which maintenance costs increase. The Panel directed Air Canada and Jazz to negotiate a further adjustment that would account for the impact of fleet age, failing which the parties will submit new proposals and analysis to the Panel.

There remain disputes between the parties with respect to the interpretation and application of the Award and its impact on the Controllable Mark-Up. Jazz is of the view that, applying the CUCD methodology, and based on the proper application of the Adjustments that the Panel has found are required to be made, the result of the 2009 Benchmark is that Jazz is not required to repay Air Canada any amounts in respect of payments made since January 1, 2010 , and that its Controllable Mark-Up will remain at 12.50% going forward until at least the 2015 Benchmark.

Air Canada , on the other hand, has asserted to Jazz its view that the impact of the Adjustments that the Panel found were required to be made would reduce the Controllable Mark-Up to 11.41%. However, this does not account for any impact that the fleet age adjustment described above would have on the Controllable Mark-Up. Air Canada took the position at the hearing that there should be no such fleet age adjustment. Jazz is of the view that, given its older fleet relative to those of the relevant comparable  operators, any fleet age adjustment would result in a Controllable Mark-Up higher than 11.41%, even if the Panel were to otherwise accept Air Canada’s position concerning the impact of each of the various other Adjustments which the Panel indicated must be made.

The parties have scheduled a further hearing with the Panel to occur in the last week of November 2012 to resolve the outstanding issues in dispute, including the impact of the fleet age adjustment. As a consequence, the impact, if any, to the Controllable Mark-Up on Jazz’s Controllable Costs cannot be stated at this time with reasonable certainty.  Chorus anticipates having all matters settled no later than the first quarter of 2013.

No amounts have been recorded in the accounts of Chorus in 2010, 2011 or 2012 related to this claim as management has determined that it is not probable that the Air Canada claim will be successful, and it is not practicable to determine an estimate of the possible financial effect, if any, with sufficient reliability.

¹ Non-GAAP Financial Measures

EBITDA
EBITDA (earnings before interest, taxes, depreciation, amortization and obsolescence) is a non-GAAP financial measure commonly used throughout all industries to view operating results before interest expense, interest income, depreciation and amortization, gains and losses on property and equipment and other non-operating income and expenses.  Management believes EBITDA assists investors in comparing Chorus’ performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and non-operating factors such as historical cost.  EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact on working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statement of cash flows which form part of the financial statements.

FREE CASH FLOW
Pre-conversion distributable cash was a key performance indicator used by management to evaluate the ongoing performance of Jazz Air Income Fund.  Distributable cash is not a measure which is commonly utilized in respect of a public corporation. Management believes, however, that it is a term with which its shareholders are familiar and has provided Free Cash Flow as a proxy for previously reported distributable income.  Free Cash Flow is calculated in the same manner as distributable cash. Free Cash Flow is defined as EBITDA less non-operating expenses, Maintenance Capital Expenditures to sustain the operation, and adjusted for any unrealized foreign exchange gain or loss on long-term debt and finance leases and any unusual non-operating one-time items.  Other capital expenditures incurred to facilitate growth of the business are excluded from this calculation.

ADJUSTED NET INCOME
Adjusted net income and adjusted earnings per share are calculated by adjusting net income by the amount of any unrealized foreign exchange gains and losses on long-term debt and finance leases.  During the third quarter of 2012, Chorus recorded a $10.0 million gain in unrealized foreign exchange on long-term debt and finance leases.  This adjustment more clearly reflects earnings from an operating perspective.

Copyright Photo: Keith Burton. Jazz Aviation’s (Air Canada Express) Bombardier DHC-8-402 (Q400) C-GGND (msn 4394) prepares to land at Air Canada’s Toronto (Pearson) hub.

Air Canada Express-Jazz Aviation: 

Air Georgian (Toronto-Pearson) and Air Canada (Montreal) have jointly announced the creation of a unique cadet pilot hiring program for high-achieving Canadian youth. The program is designed to encourage young men and women to consider careers in commercial aviation by assisting them with pilot training and offering them a clearer path to rewarding employment opportunities. Candidates must be high school graduates with a strong academic record and have demonstrated leadership ability at school and in their community.

Eligible candidates will be selected by Air Georgian with the assistance of Air Canada. They will then receive two conditional offers of employment: The first offer, from Air Georgian, will be conditional upon successful completion of both a 50-week, student-funded, pilot training program at Flight Safety Academy in Vero Beach, Florida culminating in obtaining a Commercial Pilot Licence and a Multi-Engine Instrument Rating from Flight Safety Academy and Air Georgian-funded training at Flight Safety International in Toronto. The second offer of employment, from Air Canada, is contingent upon successful training and employment as a pilot with Air Georgian for a minimum of four years as well as on meeting certain employment standards at Air Canada.

“We are very excited about our Cadet Program partnership with Air Canada,” said Eric Edmondson, President of Air Georgian. “This program will help both Air Georgian and Air Canada attract, train and employ the best and the brightest youth in Canada in a very challenging and rewarding career. This is an innovative program designed to address our need for highly skilled labour, while offering some bright and enthusiastic young Canadians a clear school-to-work transition option. This partnership with Air Canada is the result of a number of years of working closely together transitioning pilots and specifically Captains from their first airline job at Air Georgian into a career position at Air Canada. This partnership represents a single stream of recruitment and retention programs offered under Air Georgian’s “One Regional” program. Other streams include a highly successful mentorship program through a partnership with Seneca College, as well as other retention programs.”

“Air Canada is pleased to partner with Air Georgian on this innovative program. This program gives high achieving young Canadians an opportunity to develop their skills and find fulfilling careers in the challenging world of commercial aviation,” said Captain Rick Allen, Senior Director Flight Operations at Air Canada. “Both carriers will benefit from the ability to attract top talent while customers will gain assurance from the knowledge our pilots are selected from among the best candidates who will receive intensive preparation through the program’s carefully-guided training regime with its emphasis on safety.”

Flight Safety International was chosen by Air Canada and Air Georgian to provide the initial training because it is the world’s leading aviation training company. The Flight Safety Academy at Vero Beach is a world class facility where the instruction and equipment used are second to none.

Copyright Photo: Keith Burton. Air Georgian operates as an Air Canada Express operator feeding AC hubs across the country (see the route map below).

Air Canada: 

Air Canada Express-Air Georgian: 

Route Map:

Please click on the map for the full-size view.

Air Canada (Montreal) and Jazz Aviation (Air Canada Express) (Halifax) on February 1 introduced the Bombardier DHC-8-402 (Q400) to western Canada. The type was introduced on Air Canada Express flights AC 8371 from Calgary to Fort McMurray, AC 8430 from Calgary to Regina and AC 8586 from Calgary to Saskatoon.  Concurrent with rolling out new, state-of-the-art Bombardier Q400 Next Generation aircraft in these markets, Air Canada announced it is boosting capacity on key regional routes this spring and summer in response to demand.

“We are delighted to introduce the newest, ultra-quiet regional aircraft for customers in Alberta and Saskatchewan,” said Marcel Forget, Air Canada’s Vice President, Network Planning. “This spring, Air Canada will strategically increase capacity by either scheduling larger aircraft or adding flights to meet strong demand in Western Canada and we will continue to roll out the Q400 aircraft on additional routes in BC, Alberta and the Northwest Territories in the coming months. Air Canada Express flights are scheduled to enable convenient, point-to-point, same-day business travel, as well as convenient and easy connections to Air Canada’s extensive domestic, US and international network at Calgary, Edmonton and Vancouver.”

Increased capacity this spring and summer compared to last year include the following routes:

Following to the launch of the Q400 aircraft in Calgary, Fort McMurray, Regina and Saskatoon, the aircraft, featuring all-leather seats, spacious overhead bins and comfortable 31-inch legroom, is scheduled to be deployed in the coming months on the following routes:

The Bombardier DHC-8-402 (Q400) NextGen aircraft with 74 seats replaces 50-seat CRJ100/200ER aircraft, and are operated by Jazz Aviation LP under the Air Canada Express brand.

Copyright Photo: Keith Burton. Jazz Aviation’s Bombardier DHC-8-402 (Q400) C-GGMZ (msn 4399) prepares to land at the Toronto (Pearson) hub.

Air Canada Express-Jazz Aviation: 

Routes flown by Jazz Aviation for Air Canada as an Air Canada Express carrier:

Please click on the map for the full-size view.

Chorus Aviation Inc. (Jazz Aviation) (Air Canada Express) (formerly Air Canada Jazz) (Halifax) has issued its first quarter 2013 earnings, and is revising its quarterly dividend to $0.075 per share from $0.15 per share. The company reported first quarter net income of C$9.2 million ($9 million), down almost 65 percent from the $26.2 million profit in the first quarter a year ago.

First Quarter 2013 Highlights:

• Operating revenue of $416.3 million.
• EBITDA¹ of $34.2 million.
• Operating income of $20.8 million.
• Net income of $9.2 million, or $0.07 per basic share.
• Adjusted net income¹ of $14.7 million, or $0.12 per basic share.
• Billable Block Hours of 97, 202.

“The first quarter delivered solid results; however, two items negatively impacted the bottom line,” said Joseph Randell, President and Chief Executive Officer, Chorus. ”In our continued efforts to improve operational efficiency and to reduce costs, we enacted a voluntary separation program for our more senior pilots and maintenance employees.  The severance cost of $5.7 million will provide a return within the next two years as ongoing operational costs are reduced.  This expense, when factored with the unrealized foreign exchange loss of $5.6 million into the adjusted net income for the quarter, increases earnings per share to the current market consensus of $0.17 per basic share.”

DIVIDEND

Chorus and Air Canada are involved in an ongoing complex arbitration process regarding the 2009 Benchmark.  Chorus remains confident in its position that the Controllable Mark-up of 12.5% in the Capacity Purchase Agreement (‘CPA’) should not change as a result of the arbitration.  Accordingly, no amounts have been recorded in the accounts of Chorus in 2010, 2011, 2012 or 2013 related to the Air Canada claim.  Management has determined that it is not probable that the Air Canada claim will be successful, and it is not practicable to determine an estimate of the possible financial effect, if any, with sufficient reliability.

However, in any litigation process there is always some risk of an adverse outcome. This risk combined with the extended duration of the arbitration has created the risk of a material retroactive amount owing to Air Canada for the period commencing January 1, 2010 should Air Canada succeed in its claim for a material fleet age adjustment in its favour.  The longer this process continues without resolution, the larger the amount of any potential retroactive payment.

In addition, Chorus’ $80.2 million convertible debentures come due in December 2014. Chorus anticipates that an increase in liquidity will provide increased flexibility in addressing the maturity of those debentures, in the context of challenging conditions for the airline industry and global economic uncertainty. Those debentures, issued in November 2009, were used to pay part of the term debt of $115.0 million which was established at the time of the Chorus initial public offering in 2006 and matured in February 2010.  As a result, Chorus believes that strengthening its cash position during this period is prudent.

Chorus will continue to manage its financial leverage ratios, such as its adjusted net debt to equity ratio which has increased as a result of the financing of its new Bombardier DHC-8-402 (Q400) aircraft fleet. Such continued accretive investment in fleet renewal may occur either through refurbishment of the classic Bombardier DHC-8-100 and DHC-8-300 series aircraft or further investment in new generation aircraft.

In consideration of these factors, Chorus has reduced its quarterly dividend from $0.15 per share to $0.075 per share going forward. This will enable Chorus to retain additional cash of $9.3 million per quarter.

While Chorus has current cash available to pay the dividend at the previous rate, the Board of Directors has determined that, given the factors discussed above, it is prudent and advisable to conserve Chorus’ financial resources.

“We have, and continue to prudently manage our financial resources,” continued Mr. Randell.  “The regional airline industry is changing dramatically both here and south of the border. Competition is increasing significantly. We must continue in our efforts to reduce costs, strengthen the fundamentals of our business, and improve our financial position to ensure we have the flexibility required to effectively respond and compete in our ever-changing markets.”

The Board of Directors will continue to assess the dividend payment on an ongoing basis.

Financial Performance -First Quarter 2013 Compared to First Quarter 2012

Operating revenue decreased from $437.1 million to $416.3 million, representing a decrease of $20.8 million or 4.8%.  Passenger revenue, excluding pass-through costs, decreased by $6.4 million or 2.5% primarily as a result of no activity in the quarter for Thomas Cook; offset by rate increases made pursuant to the CPA with Air Canada, an increase in Billable Block Hours of 0.8%, a $0.2 million increase in incentives earned under the CPA, and a higher US dollar exchange rate. Pass-through costs decreased from $176.7 million to $162.0 million; a decrease of $14.7 million or 8.3%, which included a decrease of $1.8 million related to fuel costs. Other revenue increased by $0.2 million.

Operating expenses decreased from $407.4 million to $395.5 million, a decrease of $12.0 million or 2.9%.  Controllable Costs increased by $2.7 million, or 1.2%; offset by a decrease in pass-through costs of $14.7 million.

Salaries, wages and benefits increased by $3.1 million primarily as a result of voluntary employee severance costs related to flight crew and maintenance employees, wage and scale increases under new collective agreements, and increased pension expense resulting from a revised actuarial valuation; offset by a reduction in the number of full time equivalent employees and higher capitalized salaries and wages related to major maintenance overhauls.

Depreciation and amortization expense increased by $0.5 million, primarily related to the purchase of Q400 aircraft, increased capital expenditures on aircraft rotable parts and other equipment, and increased major maintenance overhauls; offset by certain assets having reached full amortization and a change in estimate related to the residual value of the Dash 8-100 and 300 aircraft.

Aircraft maintenance expense decreased by $2.4 million as a result of a $4.6 million reduction related to no activity for Thomas Cook; offset by an increase in engine maintenance activity due to engine charges for the CRJ705 and Dash 8 – 300 aircraft of $1.2 million, increased other maintenance costs of $0.5 million and an increase in the US-dollar exchange rate on certain material purchases of $0.5 million.

Aircraft rent decreased by $5.4 million primarily as a result of no expense in the quarter for Thomas Cook aircraft and the return of CRJ aircraft.

Other expenses increased by $1.3 million primarily due to increased professional fees, increased travel and training costs associated with the Q400 aircraft and increased general overhead expenses.

Non-operating expenses increased by $9.0 million.  This change was mainly attributable to an increase in foreign exchange of $8.8 million (of which $8.9 million was related to an increase in unrealized foreign exchange loss on long-term debt and finance leases) and increased interest expense related to Q400 aircraft financing of $1.0 million; offset by $0.8 million in other income related to a government grant.

EBITDA¹ was $34.2 million compared to $42.6 million in 2012, a decrease of $8.4 million or 19.6%, producing an EBITDA margin of 8.2%. Standardized Free Cash Flow was negative $110.9 million, impacted primarily by the continuing growth capital expenditures related to the purchase of Q400 aircraft.

Operating income of $20.8 million was down $8.8 million or 29.7% over first quarter 2012 from $29.6 million.

Net income for the first quarter of 2013 was $9.2 million or $0.07 per basic share, a decrease of $17.0 million or 64.9% from $26.2 million or $0.21 per basic share. On an adjusted basis, net income was $14.7 million or $0.12 per basic share, a decrease of 35.4% or $0.06 per basic share from $22.8 million or $0.18 per basic share.

¹Non-GAAP Financial Measures

EBITDA

EBITDA (earnings before interest, taxes, depreciation, amortization and obsolescence) is a non-GAAP financial measure commonly used throughout all industries to view operating results before interest expense, interest income, depreciation and amortization, gains and losses on property and equipment and other non-operating income and expenses.  Management believes EBITDA assists investors in comparing Chorus’ performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and non-operating factors such as historical cost.  EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact on working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statement of cash flows which form part of the financial statements.

STANDARDIZED FREE CASH FLOW

Standardized Free Cash Flow is defined as cash flows from operating activities, as reported in accordance with GAAP, less total capital expenditures and dividends.

ADJUSTED NET INCOME

Adjusted net income and adjusted earnings per share are calculated by adjusting net income by the amount of any unrealized foreign exchange gains and losses on long-term debt and finance leases.  During the first quarter of 2013, Chorus recorded an $5.6 million loss in unrealized foreign exchange on long-term debt and finance leases.  These adjustments more clearly reflect earnings from an operating perspective.

Copyright Photo: Keith Burton. Bombardier CRJ705 (CL-600-2D15) C-FCJZ (msn 15040) arrives at the Toronto (Pearson) hub.

Jazz Aviation: 

Jazz’s current route map:

Air Canada (Montreal) announced today it will commence scheduled service to Red Deer, Alberta on September 3, 2013 with three daily flights from Red Deer Airport to Calgary. Flights will be operated by Air Georgian (Toronto-Pearson) under the Air Canada Express brand, using 18-seat Beechcraft 1900D aircraft.

Copyrigth Photo: Keith Burton/AirlinersGallery.com. Beech (Raytheon) 1900D C-GAAR (msn UE-207) prepares to land at the Toronto (Pearson) hub.

Air Canada: 

Air Canada Express-Air Georgian: 

Route Map: Air Georgian operates from three far-flung Air Canada hubs.

Air Canada (Montreal) today announced that in response to growing customer demand it will launch daily, year-round service between Sydney, Nova Scotia and Toronto (Pearson) beginning on December 18, 2013 .

Air Canada and TCA has been serving Sydney and Cape Breton for 71 years.

Air Canada’s year-round, daily service between Sydney and Toronto will be operated by Jazz Aviation (Halifax) under the Air Canada Express brand using 50-seat CRJ200 regional jets. It will be the only year-round, nonstop flights operated between Sydney, Nova Scotia and Toronto .

Sydney-Toronto year-round service:

Copyright Photo: TMK Photography/AirlinersGallery.com. Jazz Aviation’s Bombardier CRJ200 (CL-600-2B19) C-FZJA (msn 7988) rests between assignments at the Toronto (Pearson) hub.

Air Canada: 

Air Canada Regional-Jazz: 

Air Canada (Montreal) announced it has successfully completed the transfer of all 15 of its Embraer 175 aircraft, the smallest jet aircraft in Air Canada’s fleet, to Sky Regional Airlines (Air Canada Regional) (Montreal-Trudeau) to operate the aircraft on behalf of Air Canada under the capacity purchase agreement between the parties. Sky Regional now operates 20 aircraft on behalf of Air Canada , under this agreement.

Sky Regional has been an Air Canada Express partner since May 2011 , operating service between Billy Bishop Toronto City Airport and Montreal Trudeau Airport with a fleet of Bombardier DHC-8-402 (Q400) turboprop aircraft. Since March 2013 , Sky Regional has been phasing in the operation of a fleet of Embraer 175 regional jet aircraft on existing Air Canada short-haul regional routes, primarily from Toronto and Montreal to destinations in the northeast United States including New York (La Guardia), Newark, Boston, Philadelphia, Chicago (O’Hare) and Dallas/Fort Worth, under the Air Canada Express banner. Sky Regional currently employs approximately 550 people and is the sole Air Canada Express operator serving Billy Bishop Toronto City, Philadelphia, Chicago (O’Hare) and Dallas/Fort Worth airports.

In addition to Sky Regional, Air Canada has capacity purchase agreements with its other regional airline partners, Jazz, Air Georgian and EVAS, that operate regional Air Canada Express flights on behalf of Air Canada.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Formerly operated by Air Canada, Embraer ERJ 170-200SU (ERJ 175) C-FEKI (msn 1700103) completes the River Approach into Washington’s Reagan National Airport.

Air Canada: 

Have you seen the “new look” AirlinersGallery.com photo library?

Air Canada Express-Sky Regional Airlines: 

Air Georgian Limited (AGL) (Air Canada Express) (Toronto-Pearson) has signed a memorandum of understanding (MOU) with Regional 1 Airlines (R1) (Calgary), a subsidiary of Avmax Group Inc., a fully integrated aviation company with operations in Canada, United States, Africa and Afghanistan. Regional 1 Airlines and Air Georgian Limited will merge operations under one management team through the creation of a parent holding company.

Air Georgian will continue to focus primarily on its CPA relationship with Air Canada (Montreal). Air Georgian currently operates Beechcraft (Raytheon) 1900D aircraft under the brand name of Air Canada Express. R1 will focus on expanding its domestic presence, specializing in serving the natural resource sector. R1 will further expand upon its existing international operations, specializing in ACMI contracts in remote regions, as well as continuing to support the United Nations World Food Program and other peacekeeping and humanitarian programs.

This strategic merger will allow the new combined entity to position itself as a unique, fully integrated airline leveraging the technical, geographical and asset strengths of Avmax and the professional management and strong operational background of Air Georgian. Air Georgian and Regional 1 Airlines will benefit from having access to the world’s largest private fleet of Dash 8 and CRJ series aircraft, over $100 million in spare parts and domestic maintenance bases in Halifax, Montreal, Kingston, Toronto, Calgary and Vancouver. International operations will be supported through Avmax maintenance bases in Great Falls, Montana, Jacksonville, Florida, Nairobi, Kenya and N’djamena, Chad in Africa.

Eric Edmondson will assume the President and CEO role at the newly formed parent company, as well as the role of President at both Air Georgian and Regional 1 Airlines. Daniel Revell will continue to be the CEO of Air Georgian and John Binder will continue in his role as CEO of Regional 1 Airlines. Scott Monsen will become the CFO & VP Finance at the parent company and its subsidiaries. Daniel Bockner will be the VP, Flight Operations & Security, while Brad Warren will fill the role of VP, Maintenance & Technical. Rick Giacomuzzi will hold the position of VP, Finance at Regional 1 Airlines. This merger does not impact the current structure or operations of any other subsidiary within AvMax Group Inc.

Upon closing, the combined operations will utilize Beechcraft 1900D, de Havilland Canada (Bombardier) DHC-8-100, DHC-8-300 and CRJ100/200 aircraft types, with the ability to quickly add additional larger gauge aircraft types with the long term goal of positioning the brands as major players in the 18-76 seat turbo-prop and jet market. Air Georgian will continue to operate, maintain and support the corporate jet charter market in Toronto as well as offering third-party training to the airline and corporate aviation sectors.

Copyright Photo: TMK Photography/AirlinersGallery.com. Beechcraft (Raytheon) 1900D C-GORA (msn UE-326) taxies at the Toronto (Pearson) hub in the Air Canada Express livery.

Air Canada Express/Air Georgian: 

Air Canada (Montreal) today announced that it will undertake a Request for Proposal (RFP) process to select a new regional airline to operate certain existing U.S. regional trans-border routes, starting in mid-2014.  Select Canadian and U.S. regional carriers will be invited to participate in the RFP process and submit their respective pricing and other terms and conditions of carriage.

“The launch of a request for proposals is an important next step in our regional airline diversification strategy and ongoing cost transformation program,” said Kevin Howlett , Senior Vice President, Regional Markets. “Over the past two years, Air Canada has made significant changes to its strategy and relationship with its regional partners, now all operating under the Air Canada Express banner.  Most recently, we transferred the operation of our Embraer 175 aircraft to a regional carrier whose cost structure is more in line with the U.S. regional carriers, and as low cost operators continue to grow in the rapidly evolving North American regional markets, it is critical for Air Canada to take the necessary steps to ensure its cost structure in these markets is also competitive.”

Air Canada currently has capacity purchase agreements with four regional airline partners: Jazz, Sky Regional, Air Georgian and EVAS.

Air Canada: 

Air Georgian (Air Canada Express) (Toronto-Pearson) will soon have an expanded role with Air Canada with a transferred fleet of Canadair Regional Jets (CRJs).

Air Canada issued this statement:

Following a previously announced Request for Proposals (RFP), Air Canada has announced that it has signed an MOU to expand its relationship and amend its capacity purchase agreement (CPA) with Air Georgian. Air Georgian has been selected to operate a number of additional regional routes including trans-border routes in mid-2014 using Canadair Regional Jet aircraft.

“We are pleased to expand our longstanding commercial relationship with Air Georgian that will allow Air Canada to introduce more cost-competitive operations in a number of our key regional markets,” said Kevin Howlett , Air Canada’s Senior Vice President, Regional Markets. “The competitive bid process generated a significant level of response from a number of Canadian and U.S. regional operators. Following a thorough evaluation of proposals received, Air Georgian was selected on the basis of a broad range of criteria including operational safety, efficiency, cost and service. The award of additional flying to Air Georgian is an important step in our regional airline diversification strategy and ongoing cost transformation program.”

“We are excited with this opportunity to expand Air Georgian’s presence as an Air Canada Express regional operator beginning in 2014,” said Eric Edmondson , President of Air Georgian. “The selection of Air Georgian for this expanded role is based on our proven ability to offer seamless connections and service for Air Canada customers that is of mutual benefit for both airlines. We look forward to continuing to expand our relationship, building on our solid partnership with Air Canada that has developed over the past 13 years.”

The implementation of the amendment to the CPA remains subject to the parties making any necessary filings, obtaining regulatory approvals and finalizing documentation.

Air Canada currently has capacity purchase agreements with four regional airline partners that operate under the banner Air Canada Express: Jazz, Sky Regional, Air Georgian and EVAS.

Air Georgian became a Tier III partner of Air Canada in 2000, operating as Air Alliance under a CPA. Today Air Georgian operates under the brand Air Canada Express, focusing on transborder and domestic airline operations carrying over 350,000 passengers per year for Air Canada from Toronto’s Pearson International Airport, Montreal’s Pierre Elliott Trudeau International Airport, Halifax’s Robert L. Stanfield International Airport and Calgary’s International Airport to 19 Canadian and U.S. destinations.

Air Georgian has been providing aviation services and charter flight solutions for more than 25 years. Air Georgian also operates and/or maintains a fleet of corporate jets from its base in Toronto. Air Georgian is an IATA registered airline and recently achieved the coveted ARGUS Platinum Audit Rating along with IS-BAO Stage 1 registration.

Copyright Photo: Keith Burton/AirlinersGallery.com. Air Georgian currently operates 16 Beechcraft (Raytheon) 1900D turboprops. 1900D C-GORC (msn UE-320) arrives back at the Toronto (Pearson) hub.

Air Canada Express-Air Georgian: 

Current Air Canada Express routes operated for Air Canada: